K SURENDRANATHAN Vs. KERALA FINANCIAL CORPN

JUDGEMENT

(1.) The petitioner challenges the validity of S.29 of the State Financial Corporations Act, 1951 (for short, the Act) under the following circumstances. He obtained a loan of Rs. 99,752/-from the Kerala Financial Corporation for purchasing machinery for a mini industry in the Mini Industrial Estate at Koduvayur, by hypothecating his properties and executing an agreement on 7-9-1977. He, however, defaulted in the payment of the instalments due to the Corporation and the Corporation therefore demanded by a written notice the payment of the balance amounts with interest and also warned the petitioner that on his failure to comply with the demand, possession of the premises would be taken over by the Corporation and assets disposed of under the provisions of the Act. The petitioner did not pay the arrears demanded; nor did be show bis willingness even to pay any portion of the debt. Instead be replied that the steps may be dropped for a further period of six months and requested that his case for granting interest rebate, refixation of the loan amount and re-schedule of the instalment may be considered afresh. When he did not make any remittance as demanded, the Corporation was constrained to take possession of the factory premises on 14-8-1982. This writ petition is thus filed challenging the validity of S.29 of the Act and for a direction commanding the Corporation to hand over possession of the factory to the petitioner and to direct them to reschedule the instalments after allowing interest rebate as claimed by him.

(2.) The petitioner's rights and liabilities arise under a contract which he has entered into with the Corporation and therefore his claim as to the amounts actually due by him are outside judicial examination under Art.226 of the Constitution of India as held by this Court in the decision in David v. Kerala State Financial Corporation ( 1988 (1) KLT 585 ) wherein it has been held thus:-

(3.) He has, therefore, confined his attack, in this court, to the validity of S.29 and if his contention is upheld, be may be entitled to restoration of possession of the factory premises. He contends that the Act has given an unguided, uncanalised power to the Corporation to take possession of the property of a defaulter and the Corporation can pick and choose one of the two remedies available to them against the same defaulter, as their discretion is not controlled by any statutory guidelines. S.29, according to the petitioner is harsh, and capable of arbitrary exercise and thus violative of Art.14 of the Constitution.